Recent price gains in the ethylene and propylene markets have been matched by chemical makers’ official selling prices with several price increases announced in recent months. Signs of a demand recovery from the coronavirus-induced slump continue to emerge. Global ethylene offtake is surging so far in July to 216,501 metric tons, compared to 158,684 Mt in June. Propylene offtake is down slightly, to 33,762 Mt from 38,006 Mt in June, but a surge in demand is taking place in Taiwan.
The opening of the ethylene export terminal in Houston by Enterprise Products Partners earlier this year started with less than 11,504 Mt loaded aboard one MGC in January, but ballooned to 77,017 Mt in June loaded aboard four MGC and two SGC class vessels. When combined with the quantities from Targa Resources, US loadings have nearly tripled from January’s 36,861 Mt to 103,079 Mt in June. They have fallen back so far in July to 73,490 Mt, but it is not because of weak demand. In Dow Chemical’s earnings conference call a week ago, the company said that it is seeing signs of a demand recovery in Asia, as well as slower improvement in the US and Europe. Latin America remains challenged.
In Dow Chemical’s earnings conference call a week ago, the company said that it is seeing signs of a demand recovery in Asia, as well as slower improvement in the US and Europe. Latin America remains challenged. Single-use plastic demand is strong, while demand for durable goods such as cars and furniture are beginning to show signs of a recovery. The improvement is prompting Dow to reopen two polyethylene plants in Texas, and a third in Argentina.
Higher domestic demand for ethylene could weigh on US loadings in coming months, but should also add support to prices. Higher prices in Asia are already prompting more cargos to flow to that region, with Taiwan taking greater amounts of both ethylene and propylene. Ethylene discharges are up to 30,789 Mt so far this month, compared to 9,297 Mt in June. The bulk of the imports were unloaded at CPC’s Kaohsiung LPG terminal, where 22,813 Mt were discharged. CPC has significant chemical operations at its nearby Linyuan site. Taiwan also discharged 19,462 Mt of propylene at the Kaohsiung terminal, compared to 12,000 Mt in June. Prior to those discharges, there were only two other small deliveries to the terminal on our records.
China does not usually receive much propylene each month, but its ethylene imports are stronger this month, with a total of 51,152 Mt versus 19,579 Mt in June. Guan Sheng Oil’s Jiaxing Zhapu terminal offloaded 11,500 Mt from the MGC Earth Summit this month, in what was its first delivery since March. The cargo was loaded at Enterprise in Houston and was shipped by BASF. The Jiangyin Chemical plant discharged 2,980 Mt this month, and marked its first delivery since January. Vopak’s Tianjin Nanjiang terminal is typically the largest offtake point in China and that is the case again this month, with 25,038 Mt of deliveries representing the highest on our records. Increased petrochemical activity is boosting demand there too, as Vopak’s docks have a connection to the nearby Tianjin Bohua Petrochemical plant.